05/20/2026
If you’ve been shopping around for mortgage rates and one lender came back with a rate that’s significantly lower than everyone else — don’t get too excited yet. Here’s what might actually be happening.
When you get a mortgage, you have the option to buy down your interest rate by paying for “discount points” at closing.
One point equals 1% of your loan amount — so on a $400,000 loan, that’s $4,000 out of pocket. Upfront.
Some lenders quote you a rate that already has points baked in. They just don’t make that obvious.
That way, it looks like a better deal when you’re comparing rates. But what they’re really doing is charging you more at closing to get you to that number.
The question you need to be asking every lender is: “Is this rate based on zero points?” That levels the playing field and lets you compare apples to apples.
To be clear, points aren’t necessarily a bad idea — sometimes buying down your rate makes a lot of sense depending on how long you plan to stay in the home. But that should be a strategic conversation you have with your loan officer directly, not something buried in the fine print.
Follow for more mortgage advice to help you buy smarter — because the more you understand about this process, the better decisions you make.
And if you’re already getting quotes and want a second set of eyes — comment or send me a message. That’s exactly what I’m here for.
